You have decided that hiring a payroll service is a good idea. You have realized that doing payroll yourself does not add anything to your business that your customers care about. That’s why you’re in business, right? To earn a better living, by serving the needs of your customers. That’s why you’d rather sign the front of the check than the back. You realize that 100% of your time and your energy need to go to adding value to your customer’s experience of your business. If you’ve ever read The E-Myth, you know it is better to work ON your business than IN your business. The rest gets eliminated or outsourced.

First, find out a few things about the service because there are several variations of what makes a payroll service. They fall into two broad categories: full service or online. Full service means you just send them your employee’s hours and they do the rest. Warning: Most “full” services won’t do local taxes; you’re on your own. Most “full” services are not any help on how to get the payroll into your accounting system. Then there is online.

Online means they are giving you access to their software and you are really doing most of the work. I don’t think this saves much effort by you and they charge only a little less. It’s great for them! This is why the big push by most places to get you to go online; it saves them having to do the work. If the idea is to save you time and effort, this fails the test.

You will want to see what their procedures are for input, funding, and output. Input- how do you transmit the hours to them, by phone call, fax, email, spreadsheet? I’ve seen some places that required 10 pages faxed each time because each employee’s entire roster of information is on the faxing form, their pay rate, address, social security number, etc. Not exactly very secure or confidential! If you are trying to keep pay information confidential within your business, this is not the way to do it!

How is the payroll funded? Most services take custody (impound) your money for wages and taxes (regardless of when they are due to be paid) and keep them in their bank account. You should know that ultimately YOU are always responsible for paying the payroll taxes. The big services are audited and bonded and are completely safe. Ask how the money is handled.For more information, go to http://www.dcxcapital.com/why-should-you-outsource-payroll/

Output – what exactly do you get? Ask to see sample reports that come with the paychecks. Is it 15 pages of mumbo-jumbo? Is it understandable if you don’t happen to be a CPA? Now, how exactly do you get the payroll “booked” into your accounting system? What about special reports, do they charge extra, and whom do you call for those? Do they do local taxes? (The withholding AND the quarterly returns?)

Finally, do they mail you the paycheck package, how much? Or, do you have to go pick it up? Will they deliver? (Most won’t). Alternatively, do you have to print out all your own checks because you chose the online payroll?

These are the major considerations/questions to ask. Oh, one more thing. In general, are they nice people to deal with? This can be hard to find out. Ask around and find people who have dealt with the company you are considering. Some payroll services are really horrible to have to deal with; they blame you in every case if an error occurred, they may be hard to reach by phone, just voicemail, and you don’t actually know if they got your instructions/messages. I just added a client who switched from a local service and as a parting gift, the old payroll service mailed him a $250+ bill saying they had reviewed large his account and realized they hadn’t charged him for certain things in the past. Wow! Nice people! Check the reputation if you can, it’s very important.

Many businesses hire payroll services to manage their payments and ensure that their employees get their paycheques on time and avoid any complications. There are many benefits to having a payroll service as it avoids mistakes, programs payments to make it on time which reduces the need to follow up on missed cheques and delayed payments. However, just like in anything else, there is always room for error and for things to fall off the plan. Frauds, mistakes, and technical problems are not impossible and hence one should always be careful. Watch for these 4 kinds of payroll fraud that could destroy your business.

Payroll Fraud

This refers to the possibility of paying more money for employees than they should be earning because of an error in the timesheets recordings. This is not necessarily a very common issue but it does happen whenever the switch to reconcile timesheets and payrolls does not take place at the time of the initial install of a payroll system. Regular follow up is also important especially when the company is too big and releasing large six digits figures in salaries it becomes very difficult to notice smaller discrepancies even when they are of a few thousand dollars.

Stealing

Whenever a company decides to use payroll services, the issue of stealing is not usually their main concern as companies are usually respectable and hire reliable and trustworthy accountants. However, one never knows what to expect from individual accountants and the chance is always there. An easy trick in which an accountant can funnel money outside the company and into their own pockets is by writing out cheques to themselves and logging under another name they just wrote a cheque for making much more difficult to track the errors.

Ghost employees

Another way apayroll fraud can occur is when an employee usually the accountant, starts writing out cheques for a “ghost employee” someone who does not exist in order to get the money themselves. This is a common type of fraud and occurs whenever the company is not monitoring seriously its money going in and out.

Worker misclassification fraud

As you may learn from reading, payroll service australia, this type of fraud is more or less the responsibility of the workplace administration. It occurs when they misclassify some of their employees as contractors for example to avoid paying them additional benefits and save on taxes and get some financial breaks. This leaves employees with less paid hours and far less benefits which bothers them and makes them think that they are being treated unfairly. This is why some start stealing money to compensate.

It is very important to be aware of all types of payroll frauds and how they occur in order to keep attention and be able to see if they are actually happening. To learn more and make sure that you are protecting yourself and your company it is important to remain informed. Check payrollserviceaustralia.com.au for more information about how to identify fraud and make sure you address it.